Nov. 28 (Bloomberg) -- The Democratic Republic of Congo’s first elections in five years may spark political and ethnic clashes, testing the stability that helped Africa’s second-biggest copper miner boost output five-fold since the last vote.
The United Nations and Congolese rights groups say violence is likely after today’s vote, which pits incumbent President Joseph Kabila against 10 challengers. Prolonged conflict may destabilize an economy that attracted $2.9 billion of foreign investment last year, a more than 10-fold increase since 2006. Congo held its first multiparty elections in 40 years then.
Congo boosted copper exports to 500,000 metric tons from 100,000 tons during those five years, according to central bank data, as companies including Freeport McMoRan Copper & Gold Inc., Glencore International Plc and Eurasian Natural Resources Corp. expanded projects in the Central African country. Congo has about 30 percent of the world’s deposits of cobalt, used to make rechargeable batteries, and 4 percent of copper reserves, most of which are located in the southeastern Katanga province.
“Should post-election protests take a violent direction, further questions over Kabila’s legitimacy will be raised, which will have a negative impact on investment and expansion plans in the medium term,” Mike Davies, associate director at Maplecroft, a Bath, U.K.-based research group, said in an e-mail. “After several years of relative stability, major political violence in Katanga will represent a shift in the base case on which current investments have been made.”
Decade of War
The elections, in which almost 19,000 candidates are also vying for 500 parliamentary seats, are the second since Congo in 2003 emerged from nearly a decade of war that engulfed the country and surrounding nations. At least 3.1 million people died between 1998 and 2007 as a result of conflict, making it the deadliest since World War II, according to the New York-based International Rescue Committee. The toll includes deaths from disease and hunger attributed to wartime conditions.
Kabila is seeking another five-year term on the basis of his recent economic record. Since late 2009, the country has rebounded from a plunge in commodity prices caused by the global economic crisis that decimated mining operations and spawned annual inflation of 50 percent. Gross domestic product grew 7.2 percent last year, compared with 2.8 percent in 2009, according to the International Monetary Fund, while inflation is currently at 17.5 percent, according to the Central Bank of Congo.
That improved economic performance hasn’t translated into improved living standards for most Congolese. The country this year ranked last out of 187 nations in the United Nations Development Programme’s Human Development Index, which measures health and education indicators and income. Congo is also one of the most difficult places in the world to do business, according to the World Bank, which placed Congo 178th out of 183 countries surveyed last year.
Corruption has stymied the growth of small and medium-sized businesses, according to the World Bank. It has also helped keep more than 90 percent of its working citizens out of the formal job market, the government says.
The Global Hunger Index, compiled by a group of non-governmental organizations including the Washington-based International Food Policy Research Institute, categorizes food-security situation in Congo as “extremely alarming” over the past year, a downgrade from the previous “alarming.” The index in October had the country last in its rankings of 81 developing nations. The data was collected before the food crisis in the Horn of Africa caused a famine in parts of Somalia.
Public disaffection with the election process sparked clashes between opposition supporters and security forces throughout the country ahead of the vote. At least eight people died and 74 were wounded in Kinshasa on Nov. 26 in fighting involving Congolese security forces and opposition supporters, according to Human Rights Watch, the New York-based advocacy group. Tension between ethnic groups, often rooted in long-standing disputes over land and jobs, has already flared in Katanga and the eastern Kivu provinces, it said in a separate report on Oct. 28.
At least three gunmen died and two were arrested by Congolese security forces in violence today in Katanga’s capital, Lubumbashi, said Francois Kashinda Tshongo, spokesman for Moise Katumbi, the province’s governor. The unrest temporarily closed some voting stations and Katumbi has requested an extension to voting hours, Kashinda said by phone from the city.
Fighting may intensify if the electoral commission announces Kabila’s victory on Dec. 6 and the opposition contests the results, according to Jason Stearns, a Nairobi-based analyst who writes the Congo Siasa blog and is the author of “Dancing in the Glory of Monsters” about the war in Congo. He headed the UN Panel of Experts on Congo in 2008.
“Perhaps most serious is the possibility that more than one candidate will declare victory, regardless the outcome,” Stearns said by e-mail Nov. 25. Etienne Tshisekedi, Kabila’s main opponent, “has already done so, and the incumbent is sure to challenge him. All of this is likely to provoke urban unrest and possibly undermine the legitimacy of the incoming government.”
Tshisekedi, 78, earlier this month announced that he’ll become president even if he loses. On Nov. 27, he told reporters in Kinshasa that he could accept losing the vote only if it is transparent and credible.
As the leader of the Union for Democracy and Social Progress party, he has called for new laws against corruption, improvements in agriculture and a jobs program. Tshisekedi has also pledged to improve the country’s image for investors, which has deteriorated after the government’s three-year review of mining contracts and the sale over the past two years of mining and oil concessions at below-market rates.
The implications of post-election violence for different mining projects in the country will vary, said James Smither, associate director at Maplecroft.
“Even mines that are relatively close together can have a dramatically divergent contractual, stakeholder and physical security outlook,” he said by e-mail. “Investors will need to continue to distinguish between individual projects in the province when making their assessments.”
AngloGold Ashanti Ltd., the world’s third-biggest gold producer, based in Johannesburg, and Baar, Switzerland-based Glencore, which owns Katanga Mining Ltd. in Congo, both declined to comment on the vote. ENRC, based in London, along with Toronto-based Banro Corp., didn’t respond to e-mailed requests for comment.
“We are hopeful that the election process in the DRC will be conducted peacefully,” said Eric E. Kinneberg, spokesman for Phoenix, Arizona-based Freeport McMoRan, which controls the largest single investment in the country, a $2 billion copper project. “We will monitor closely the situation and coordinate as appropriate with local authorities to ensure the safety of our employees and protection of our facilities.”
Randgold Resources Ltd., based in London, is “monitoring the situation but at this stage have no specific concerns,” Chief Executive Officer Mark Bristow said by e-mail on Nov. 25.
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